Alabama Mercedes Deal Goes Beyond The Sticker

October 11, 1993|By Jim Yardley, Cox News Service.

TUSCALOOSA, Ala. — After a long day of negotiating, Billy Joe Camp, Alabama's economic development director, reached into his pocket and forked over his keys. The Germans, he realized, wanted to go bar-hopping.

"They went to the Mexican restaurant, La Fiesta, and afterward they went off to the university campus and-I almost had a heart attack-they went into the Houndstooth bar," Camp recalled.

In the afterglow of the recent announcement that Mercedes-Benz will build a $300 million assembly plant near Tuscaloosa, the story emerged of how Alabama outlasted regional rivals to win the industrial plum.

It is a tale that goes beyond $253 million in incentives to the intangible art of the deal: a trip to the Houndstooth, a visit with the University of Alabama football team, the hills of Birmingham (much like those near Stuttgart, Germany, where the automaker is based) and a champagne toast 30,000 feet over the Atlantic.

The smart money in April had Mebane, N.C., as the favorite for the plant. But Alabama Gov. Jim Folsom, sworn in just days earlier, decided to go after Mercedes anyway. "I myself had doubts at first," Folsom said.

Three or four weeks later, the governor led a delegation to Mercedes headquarters in Stuttgart and met with the company's site-selection committee.

For its U.S. plant, Mercedes looked at 170 sites in 30 states. Alabama seemed like a tough sell. Folsom talked about the high-technology industries in Huntsville and the medical facilities in Birmingham. The Germans listened and stayed "very quiet," Folsom recalled.

Gradually, the competition grew serious as Mercedes spent the summer trimming the list of potential sites. Company officials, insisting on secrecy, slipped in and out of Tuscaloosa, usually staying at the exclusive North River Yacht Club resort. On one visit, Dieter Zetsche, a high-ranking Mercedes official, arrived for a site inspection and identified himself only as "Peter." Camp knew he shouldn't pry any further.

Meetings lasted hours as Camp and Mercedes officials hammered out incentive deals and other issues. State and local business leaders, smelling possible victory, agreed to pony up $15 million in cash and services. Local governments promised $30 million. The state offered $140 million in infrastructure improvements.

The soft sell also was going full-bore.

At the season's first University of Alabama football game, Camp and Mercedes general counsel Siegfried Schwung, who was posing as just another foreign lawyer, sat in the chancellor's box and visited the locker room. The Crimson Tide had allowed a long touchdown late in the game, and Coach Gene Stallings was blistering his players when Camp and Schwung walked in.

Andreas Renschler, who will run the plant, visited Alabama in July and was shown the nearby Birmingham suburbs as a possible home for Mercedes officials. Ringed by foothills of the Appalachian Mountains, Birmingham struck a chord with Renschler. "He said (the hills) reminded him of Stuttgart," said state Rep. Taylor Harper of Mobile.

Camp knew Renschler was flying back to Stuttgart out of Birmingham, and he quickly called his German trade liaison, Wolfgang Erdmann, who happened to be in Alabama.

"Get on that plane," Camp said. Erdmann did, and he sat beside Renschler in first class. The two talked and sipped champagne.

"While we were going over some philosophical questions, he said, `Well, maybe we are lucky,"' Erdmann recalled. "The two glasses rang."

Finally, it came down to a telephone call.

On Sept. 21, Folsom was attending the Southern Governors' Association convention in Richmond, Va. As he was participating in a live televised forum, Folsom got word he had a call from Germany. During a three-minute break, he bolted for a phone.